The State Department said on Thursday that it had yet to decide how, or if, it will replace about 1,000 private security guards from Blackwater Worldwide who have been operating in Iraq.

The Iraqi Ministry of the Interior informed the U.S. Embassy in Baghdad on Jan. 23 that Blackwater's application for an operating license would not be approved and the embassy would have to find a new security company.

"We're going to encourage, of course, contractors working for us to comply with Iraqi law," State spokesman Robert Wood said in a Thursday briefing with reporters. "We're right now looking at the implications of this decision by the Iraqis."

Wood said State was considering a variety of possibilities for replacing Blackwater.

One possibility, the spokesman acknowledged, was shifting some of Blackwater's work to another private security contractor.

Blackwater, of Moyock, N.C., is the largest of three firms that operate under the 2005 Worldwide Personal Protective Services contract to guard diplomats and infrastructure in Iraq. Two other U.S. companies, DynCorp International of Falls Church, Va., and Triple Canopy of Herndon, Va., also operate under the WPPS umbrella contract.

In April 2008, State extended its contract with Blackwater through May 2009 but the department can cancel the deal at any time. On Friday, a senior U.S. official told the Associated Press that State would not renew Blackwater's contract when it expires.

It is unclear, however, if DynCorp or Triple Canopy would be able to pick up the slack left behind by a Blackwater departure.

According to a July 2007 report from the Congressional Research Service, of the nearly 1,400 guards operating under the WPPS contract, Blackwater provides about 70 percent of the staffing. DynCorp's 150 guards protect facilities and infrastructure in the relatively secure northern Kurdish region while about 250 employees from Triple Canopy operate in southern Iraq, the report said.

Despite its comparatively small contingent of security contractors, DynCorp officials have said previously that they would be ready to take over for Blackwater if State called on them to do so.

In a December 2007 interview, DynCorp spokesman Gregory Lagana told Government Executive that he suspected the company would have little difficulty recruiting enough trained professionals to fill the positions vacated by Blackwater.

"It would take some time to ramp up, but we have the experience and the capacity to do it," Lagana said at the time.

DynCorp was the lone contractor on the original March 2000 WPPS contract. But after a disagreement regarding the amount of training that security personnel would receive, State decided to divvy up the work among the three firms.

DynCorp and Triple Canopy officials declined to discuss any potential changes to the WPPS contract on Friday, referring all inquiries to State.

Iraqi officials have said the licensing ban applies only to the Blackwater company, suggesting that employees could leave the firm and later return to the country after taking a job with another private security contractor.

It is also possible that, with President Barack Obama beginning the process of reducing U.S. forces in Iraq, it won't be necessary to replace all the Blackwater guards in the long run sources have speculated.

For years, Blackwater has enraged Iraqis for its allegedly aggressive tactics and reports of excessive force, culminating in the September 2007 shooting in Baghdad's Nisoor Square that left 17 Iraqi civilians dead. Five former Blackwater guards pleaded not guilty last year to federal charges in the United States related to the incident.

No deadline has been set yet for Blackwater to vacate Iraq, officials said.

In an interview on Thursday with the Associated Press, Blackwater founder Erik Prince said the company had not received any indication from State when it would be ordered to leave.

Company officials told the AP that it could remove its nearly two dozen aircraft and all of its security contractors within three days of receiving an evacuation order but that such a decision would damage American interests.

"Our abrupt departure would far more hurt the reconstruction team and the diplomats trying to rebuild the country than it would hurt us as a business," Prince told the wire service.

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